Wall Street closes up in short Christmas Eve session

Wall Street's main indexes all ended higher, with gains in megacap and growth stocks bolstering benchmarks in a truncated Christmas Eve session.

Both the Dow Jones Industrial Average and the Nasdaq Composite scored four straight sessions of gains. For the Dow, the run follows its 10-session skid earlier this month, its longest losing streak since 1974.

The benchmarks closed higher on the first day of a historically strong period called the "Santa Claus rally". The S&P 500 on average has gained 1.3 per cent in the last five days of December and first two days of January, according to data from the Stock Trader's Almanac going back to 1969.

With megacap stocks having outsized influence on markets, their performance is often a key driver of indexes. When coupled with reduced trading volumes and few other catalysts, as many investors take time off for the holidays, this is even more pronounced.

All the so-called Magnificent Seven megacap technology stocks climbed on Tuesday, led by Tesla.

The automaker's rise helped push consumer discretionary shares higher, making them the top gaining sector in the S&P.

Elsewhere, chip manufacturers were also buoyant. Broadcom and Nvidia were up, while Arm Holdings climbed a day after losses from losing a court case.

Growth names rose despite US Treasury interest rates remaining elevated - the benchmark 10-year note yielded around 4.61 per cent on Tuesday. Traditionally, higher debt costs crimp growth stocks.

However, the long-term themes around technology development, including advancements in artificial intelligence, overshadow any near-term moves in Treasuries, said Charlie Ripley, senior investment strategist for Allianz Investment Management.

"This reinforces that view that the sector is going to remain strong, and should be well into the new year," he said.

According to preliminary data, the S&P 500 gained 64.93 points, or 1.09 per cent, to end at 6,039.00 points, while the Nasdaq Composite gained 264.31 points, or 1.34 per cent, to 20,029.19. The Dow Jones Industrial Average rose 366.75 points, or 0.85 per cent, to 43,273.70.

Stock markets shut at 1pm local time on Tuesday and will be closed for Christmas on Wednesday.

After a stellar run to record highs following the November election, which sparked hopes of pro-business policies under US President-elect Donald Trump, Wall Street's rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.

The US Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump's policies stoking inflation.

Allianz's Ripley said the themes which had driven the market higher in the past two months remained intact, and actions by the Fed had not killed the rally.

"Heading into 2025, things are set up with good positioning," he said, noting factors including economic outlook, consumption in the US and the labour market.

Crypto-related stocks traded higher on Tuesday, including Microstrategy, Riot Platforms, and MARA Holdings, as the price of bitcoin advanced.

NeueHealth soared after the healthcare provider said New Enterprise Associates, its largest shareholder, and a group of existing investors will take the company private in a $US1.3 billion ($A2.1 billion) deal.